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Effects of Corona Virus and Government Policies on Stock Markets

US Stock responded affirmatively to the Fed Rescue Program

The global economy has been going through some transformation due to the current pandemic that has hit the major economies around the globe, much is dependent on the government strategies to minimize the overall financial impact of Corona Virus on the economy as the affected cases swiftly rising to cross 10,000 mark despite the strict lockdown.

The impact of the Corona Virus was seen in the Indian Stock Market on 23 March 2020 when the Sensex crashed by 2500 points.

However, the government announced swift measures and economic strategies to minimize the impact of the economic slowdown, the result of which was also seen in the stock market and the sentiments of the investors.

A strong announcement on the economic stimulus package shall have an impact on stock markets and the market movement is likely to be stimulated with RBI minutes and inflation numbers. It is likely that some of the worst affected sectors and MSMEs may get some relief.

However, it is likely that the lockdown shall be extended for another two weeks and the impact of this could lead to more market fluctuation.

With the impact of the lockdown, the Indian Rupee fell to 76.55 against the US dollar, despite the several measures taken by Reserve Bank of India to curb the impact. Due to the economic uncertainty affecting the global markets amidst the coronavirus pandemic and the fragile sentiments of the investors, the rupee had rolled on the downward trajectory.

As the trader’s sentiments are hit by the slowdown, India VIX saw a sharp downfall last week, crossing the psychological 50-mark, which means that in times to come to the traders foresee lower volatility.

Experts advise that any negative surprises arising out of the lockdown could have an impact on the bourses. a fall of VIX beyond 30 levels could indicate a good starting point for accumulating stocks which investors should keep a watchful eye on.

Due to the drop in demand, many economists believe that the inflation data for March, which would be announced this week, shall ease from 6.58 percent from February this year.

Amidst the coronavirus pandemic spread worldwide and the expectation of another round of economic & fiscal stimulus to be introduced by the government before the upliftment of lockdown also bolstered the market, the Sensex ended up by 1265.66 points on Thursday, compared to the previous close of 29.893.96, Sensex closed at 31,159.62 points. The Nifty closed at 9111.90, 363.15 points higher.

The marketers hope and expect the stock markets to show positive results soon. Experts believe invest in stocks of companies that have good management, strong balance sheets and are market leaders would deliver good results.

Nifty indicated some stability after witnessing many weeks of continued correction and closed on 9,100 points on Thursday. Upside momentum in buying interest was noticed and a 20-day index average indicated a long bullish trend on the charts with the potential to move towards 9300 level experts say.

Since the last 3 sessions, the index formed higher highs and lows indicating some stability. It closed above the 20 DEMA mark on Thursday.

US Stock responded affirmatively to the Fed Rescue Program

Similar upright trend was seen in the US stock markets on Thursday as the US Federal Reserve announced a Fed Rescue Program with fiscal benefits and measures for small and medium businesses and local governments affected by the Corona Virus outbreak, Wall Street closed on a positive note on Thursday. The Dow Jones Industrial Average rose by 1.22 percent to 285.8 points, the S&P 500 gained 39.84 points, or 1.45 percent, to 2,789.82 and the Nasdaq Composite added 62.67.


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